Highlighting the Construction Component of the 2023 MEREDA Index
On May 25, Drew Wing, President of Zachau Construction, was a commentator for the Maine Real Estate & Development Association’s (MEREDA’s) 2023 MEREDA Index. Drew’s comments on the Construction Sector follow Economist Charles Colgan’s analysis for 2022.
The MEREDA Index is a measure of real estate activity designed to track changes in Maine’s real estate markets. The Index is a composite of nine seasonally adjusted measures reflecting both new development and transactions involving existing properties and it covers both the commercial and residential markets statewide. The most recent edition covers the year 2022 and provides commentary on the Commercial, Residential, and Construction sectors. The MEREDA Index for 2023 is 115.8
THE CONSTRUCTION COMPONENT: 102.5
[Charles Colgan Analysis] “The Construction Employment Index was up rather strongly at 6.4%. The seasonally adjusted Index had values over 100 for all four quarters, though there was a steady drop over the year. The strength in the construction sector relative to the other sectors is most likely a function of spending fueled by the Bipartisan Infrastructure Law (BIL), which allowed Maine DOT to expand the number of projects underway. The BIL will continue to support construction, but the fall in residential permits noted above will offset at least some of that stability in construction.”
[Drew Wing, President, Zachau Construction] “2022 was our biggest year in our 53-year history! I’m sure other firms shared this experience. While the volume of work across all sectors was tremendous, it was probably one of the most challenging years for both our pre-construction efforts and project delivery.
More than any other year, 2022 required true partnerships between owners and construction managers. Nearly 100% of our work is negotiated work, where we work as construction managers for a predetermined fee and give the owner a “Guaranteed Maximum Price ‘’ for the work. While there has been a general trend toward this project delivery method, it became one of the only viable options for the construction of large projects in the last few years. A high level of trust was required by both parties with each taking on additional risks to advance projects amidst supply chain disruptions, labor shortages and continued price escalation. Careful planning and early procurement – often in advance of final contracts, was required with increased risks for both parties. One of our project managers joked that she didn’t know what she would do with the other 6 hours of her day if things returned to a more normal state, emphasizing the amount of additional work required to manage this scarcity and volatility.
2022 made us a stronger company. It was like hitting the gym hard – finding new muscles and strengthening the rest. We realized very quickly that our best opportunity for impacting the trajectory of a project was early and we began investing more and more resources in early planning and the pre-construction process. The tools, processes and protocols that we developed have become standard operating procedures, increasing our capacity and ability to manage a dynamic and complex market.
We were fortunate to work with some of the best companies in the state and with individuals who understood the importance of transparency and a team approach for dealing with the complex challenges that 2022 presented. This reinforced our core values and commitment to building honest relationships and working with good people.
Finally, 2022 also reinforced the paramount importance of our people, as well as the need to keep and attract new talent. We worked hard to understand the needs and wants of our people so we knew what was needed to build our team. We have doubled-down on our commitment to maintaining a robust and fun culture which celebrates our people, their interests, and hard work.”
